Employees State Insurance … vs Mr.Biju Redhakrishanan on 3 December, 2008

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

Ins.APP.No. 48 of 2008()


1. EMPLOYEES STATE INSURANCE CORPORATION
                      ...  Petitioner

                        Vs



1. MR.BIJU REDHAKRISHANAN,
                       ...       Respondent

                For Petitioner  :SRI.THOMAS MATHEW NELLIMOOTTIL

                For Respondent  :SRI.E.K.NANDAKUMAR

The Hon'ble MR. Justice M.N.KRISHNAN

 Dated :03/12/2008

 O R D E R
                            M.N.KRISHNAN, J
                        =====================
                           INAP No.48 OF 2008
                        =====================

                Dated this the 3rd day of December 2008

                               JUDGMENT

This appeal is preferred against the order of the Employees’

Insurance Court, Kozhikode in I.C.No.72 of 2004. By Ext.P1 order therein

the E.S.I.Corporation imposed damages of Rs.17,949/- as penalty for the

delayed payment of contribution. The contention of the applicant before the

E.I.Court that it was due to financial difficulties and circumstances, which

were beyond the control of the management it was unable to pay the

amount. The court, after elaborately considering the matter had found that

damages are not liable to be paid. Unlike imposition of interest under

Section 39 of the E.S.I.Act it is not mandatory or obligatory on the part of

the Corporation to levy damages under Section 85B of the Act. Imposition

of damages is in the form of a penalty which is of a plenary nature and

therefore it is desirable to exercise that discretion judiciously. Time and

again the Apex Court as well as this Court have cautioned that as a matter of

fact of routine affair, damages cannot be imposed. There must be

contumacious conduct , deliberate evadement and intention to flagrantly

INAP 48/2008 -:2:-

violate the intention of the statute. Recently this point has been elaborately

considered by a Division Bench of this Court in the decision reported in

Regional Director, ESI Corpn. v. Managing Director, M/s.Qeteos Ltd.(ILR

2008(3) 132). This court held that “levy of damages for delayed payment of

contribution is not mandatory in all cases and if there is no mens rea and the

employer was unable to pay the contribution in time due to circumstances

beyond its control, damages can be waived completely”. The learned Judges

also referred to the earlier Supreme Court decision and quoted the

guidelines given by the Apex Court as follows: “Existence of mens rea or

actus reus to contravene a statutory provision must also be held to be a

necessary ingredient for levy of damages and/or the quantum thereof”.

Applying these decisions to the facts of the present case, it can be seen that

the ESI Corporation was not right in imposing damages for delay of

payment by one month. I feel it is an extreme action to which the

Corporation should not have resorted to. The explanation offered is the

financial difficulties and there is nothing on record to show that there is any

contumacious conduct or willful or deliberate attempt to evade payment. In

such circumstances, it is always desirable that the discretionary jurisdiction

is exercised in favour of the person, who is not guilty of such acts.

Therefore I totally concur with the view expressed by the EI Court

INAP 48/2008 -:3:-

regarding waiving of damages and there is nothing to interfere with the said

decision.

INAP is disposed of as above.

M.N.KRISHNAN, JUDGE

Cdp/-